The correct answer is D. All of the above.
India’s balance of payments is the difference between the value of its exports and imports. A favorable balance of payments means that India is exporting more than it is importing. An unfavorable balance of payments means that India is importing more than it is exporting.
There are a number of reasons why India’s balance of payments has been unfavorable in recent years. One reason is the increase in the price of petrol. India is a major importer of oil, and the increase in the price of oil has led to an increase in India’s import bill.
Another reason for India’s unfavorable balance of payments is the payments of interest on foreign debts. India has a large foreign debt, and the interest payments on this debt are a significant drain on India’s foreign exchange reserves.
Finally, India’s liberalization of imports has also contributed to the country’s unfavorable balance of payments. The liberalization of imports has made it easier for Indian companies to import goods and services, which has led to an increase in India’s import bill.
All of these factors have contributed to India’s unfavorable balance of payments. The government of India is taking steps to address the problem, but it is a complex issue that will take time to resolve.
Here is a brief explanation of each option:
- Option A: Increase in the price of petrol. India is a major importer of oil, and the increase in the price of oil has led to an increase in India’s import bill. This has put a strain on India’s foreign exchange reserves and contributed to the country’s unfavorable balance of payments.
- Option B: Payments of interest on foreign debts. India has a large foreign debt, and the interest payments on this debt are a significant drain on India’s foreign exchange reserves. This has also contributed to India’s unfavorable balance of payments.
- Option C: Liberalization of imports. The liberalization of imports has made it easier for Indian companies to import goods and services, which has led to an increase in India’s import bill. This has also contributed to India’s unfavorable balance of payments.